Govt Sources: BG Group May Join GSPC Regas Terminal Project

AHMEDABAD: Gujarat hopes to reap quick dividends from the softening stand of the British government towards Chief Minister Narendra Modi as the UK's BG Group has initiated talks to team up with a state venture for a Rs 4,000-cr LNG terminal in the state.

Government sources said that state-run Gujarat State Petroleum Corporation (GSPC) and the UK-based BG Group are negotiating a deal to commission a terminal to import 5MT a year of liquefied natural gas.

GSPC has already concluded a deal to buy BG's controlling stake in the city-gas distribution venture in the state, Gujarat Gas Company Limited (GGCL). GSPC is country's largest LNG trader with revenues of Rs 8,500 crore. It is planning a terminal at Mundra, which can be expanded to a capacity of 20 mtpa. GSPC and Adani Group hold 50% and 25% stake, respectively, in GSPC LNG Limited. They have been scouting for strategic partner to offer 25% stake in the proposed Rs 4,000-crore project in first phase. However, GSPC and Adanis lack exposure in managing regasification facility.

BG is an established player in the business and has facilities in Egypt and Trinidad and Tobago and is developing a plant in Australia. Its regasification facilities are operational in the US, the UK and Chile. In 2011, BG sold 12.8 mtpa LNG and delivered 208 cargoes.

Last week, the British government decided to end its no-contact policy with the Gujarat after 2002 riots. It is aiming at exploring opportunities for closer cooperation with Gujarat. Request anonymity, a top government of Gujarat official engaged with the energy department revealed that GSPC is in talks with BG among other players for LNG project partnership.

"There is a strong possibility of GSPC - BG partnership as governments of Gujarat and UK are keen to have mutually beneficial cooperation. It will enable BG Group to continue to have association with Gujarat. We don't rule out possibility of discussions related to GSPC - BG partnership for LNG project when British envoy led by High Commissioner James Bevan meets Gujarat CM soon," said the official. GSPC has appointed UK based Whessoe Project Limited as project management consultant.

This month, sole bidder GSPC inked an agreement with BG to acquire its 65% stake in city gas distribution major GGCL for Rs 2,460 crore. It was amidst accusations of Gujarat government mistreating BG by discouraging possible bidders for GGCL. However, equity deal for LNG project may discard this charge.

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Petronet to Commission Second Import Terminal at Kochi

NEW DELHI: Petronet LNG, a privately registered firm promoted by state-run oil companies for importing gas in ships, would commission its second import terminal at Kochi in Kerala by the first quarter of 2013 calendar year and expand the capcity of its Dahej facility to 15 million tonne by 2015.

The company would also build a third terminal for importing gas in ships and at Gangavaram in Andhra Pradesh, according to company CEO A K Balyan. The cmpany had on Friday reported its highest quarterly profit at Rs 315 crore in the July-September period on the back of better margins and operational efficiency. ""We operated (the 10 million tonne a year) Dahej import terminal at 106% capacity during the quarter,"" Balyan said while announcing a 21% rise in quarterly profit on Friday.

He said the Kochi the terminal will operate only to less than a fifth of its 5 million tons a year capacity as the off-take infrastructure is not yet ready.

State-owned gas utility GAIL India is laying pipelines connecting the Kochi terminal to consumers in two phases - the first phase connecting four consumers like Kochi refinery and FACT Tranvancore would be completed by December-end. Upon this, the Kochi LNG terminal will be comissioned but it will operate at only 0.5-1 million tons capacity for the first year due to limitation of gas off-take.

The second-leg of the pipeline which will connect Kochi to Bangalore and Mangalore is expected to be completed by next year end, he said adding Kochi terminal would operate at full capacity thereafter.

Import volumes remained flat at 135 trillion units but there was a 5% increase in margin it gets on turning liquid gas back into its gaseous state. Also, the firm got better trading margins on cargoes.

Turnover rose 41% to Rs 7,549 crore. The company had a forex gain of Rs 114 crore against a loss of Rs 52 crore, year-on-year.

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New Construction in Petrochemical

Barauni Petrochemical Plant
Facility Type:	Petrochemical
Scope:	New Construction
Owner:	GAIL (India) Limited; Indian Oil Corp. Ltd.
Location:	Barauni  India
Region:	Central & Southern Asia
Modified:  November 03, 2008

Project description

GAIL (India) Limited and Indian Oil Corp. Ltd. (IOCL) on Oct. 31, 2008, signed a memorandum of understanding (MoU) to jointly explore the possibility of setting up a mixed-feed cracker complex based on naphtha and natural at Barauni in India's Bihar state. The estimated $2-billion petrochemical plant would cater to India's growing polymers market and the ready availability of naphtha and natural gas from domestic sources.

As a result of the MoU, GAIL and IOCL will form a joint working committee consisting of two representatives from each company. The committee will conduct a techno-economic feasibility study of the project, including feedstock (naphtha and natural gas) management.

GAIL will assess natural gas availability from the offshore Krishna-Godavari (KG) basin, including the potential for using the rich gas to be used as part of the feedstock for the project and determining how to distribute the gas from the field to the project site. GAIL will subsequently develop an appropriate definitive agreement for supplying the gas to the joint venture -- once a JV is formed.

IOCL's role in the study will focus on assessing the availability of off-gas and naphtha -- not only from its Barauni refinery but also from its other operating refineries. In addition, the company will investigate the modality for transporting the off-gas and naphtha to the project location. Once a JV is formed, IOCL will develop appropriate definitive agreement(s) for supplying these primary feedstocks for the proposed plant.

Key Stats

Capacity: 300,000 tons per year

Cost: INR100B (US$2B)

Dahej Petrochemical Complex
Facility Type:	Petrochemical
Scope:	New Construction
Owner:	ONGC Petro-additions, Ltd. (OPaL)
Location:	Dahej Special Economic Zone, Gujarat state  India
Region:	Central & Southern Asia
Modified:  January 05, 2009

Project description

Through the special purpose vehicle (SPV) ONGC Petro-additions Ltd. (OPaL), India's Oil and Natural Gas Corp. (ONGC) has proposed building a petrochemical complex in the Dahej Special Economic Zone (D-SEZ) in the western Indian state of Gujarat.

The planned complex will comprise an ethylene cracker and associated units and polymer plants to manufacture 1.1 million tonnes of ethylene, 400,000 tonnes of propylene, 150,000 tonnes of benzene, and 115,000 tonnes of butadiene per year.

The ethylene cracker, which will be built on a turnkey basis by a consortium of The Linde Group and Samsung Engineering, will be the largest such plant in India. In this project, Linde will provide the steam cracker technology, perform basic engineering, and supply critical components. Samsung will perform the detail engineering, supply the remaining components, and construct and assemble the plant.

The complex, which will serve as the anchor industry in D-SEZ, will help to develop various plastic processing industries within the zone and take advantage of export opportunities, according to ONGC.

ONGC owns a 26% stake in the project and Gujarat State Petroleum Corp. owns 5%. According to media reports cited in a November 2008 Dow Jones Newswires article about the project, ONGC intends to sell up to a 25% stake in the venture to raise funds given the current state of the global credit market. Also, the reports stated that Gail (India) Ltd. has approved taking up to a 19% stake in OPaL. The anticipated completion date of the complex is late 2012.

Key Stats

Major process units: ethylene plant; associated units and polymer plants

Products: ethylene; propylene; benzene; butadiene

Capacities: 1.1M tonnes per annum ethylene; 400,000 t/a propylene; 150,000 t/a benzene; 115,000 t/a butadiene

Cost: INR135B (approx. US$2.7B)

Contractors: The Linde Group-Samsung Engineering consortium (turnkey ethylene plant)

Information about Indian Oil Refinery

The Gujarat Refinery at Koyali in Western India is IndianOil’s largest refinery. The refinery was commissioned in 1965-1966. Its facilities include five atmospheric crude distillation units. The major units include CRU, FCCU and the first Hydrocracking unit of the country. 

Gujarat Refinery, operating with an installed crude processing capacity of 13.7 million metric tonnes per annum, processes indigenous and imported, both low sulphur and high sulphur grades of crude oil. The product slate includes besides fuels, petrochemical products such as Linear Alkyl Benzene (LAB), Polypropylene Feed Stock, Food & Polymer Grade Hexane. 

Gujarat Refinery is implementing a mega project worth around Rs.7000 crore to comply with the road map for supplying eco-friendly Bharat Stage-III and IV compliant MS and HSD and to upgrade the bottom of the barrel to improve the gross margin of the Refinery. 

The Refinery has invested about 40% of the project cost for producing eco-friendly products to take care of environment at the consumer’s end. Quality Improvement units like Diesel Hydrotreater, Sulphur Recovery Plant with 99.9% conversion alongwith state-of-art Sulphur Pelletisation Unit and Hydrogen Unit have already been commissioned. The Refinery has already started dispatching both BS-III and -IV compliant products to the market. The project related to the upgradation of the bottom of the barrel is at an advance stage of construction / commissioning. 

To take care of environment, Gujarat Refinery has registered its Clean Development Mechanism project “Flare Gas Recovery” under the United Nations Framework for Combating Climate Change, and the facilities have already been installed. State-of-art Central Effluent Treatment facilities have been made installed to meet the revised MINAS specifications. Total treated effluent recycling in the cooling tower is already been in place as a part of IndianOil’s fresh water conservation policy. 

Gujarat Refinery has given top most priority to tree plantation as a part of air pollution control measures. About 2 lakh trees have been planted over 139 acres land in the periphery of the Refinery. By setting up a pond spread over 3 acres, a home away from home has also been created for birds, both migratory and non-migratory. 

It is Gujarat Refinery’s sustained endeavour to conserve energy by adopting well hydrogen recovery and management system, recovery of heat from residual heat of hot streams, selecting high efficiency and latest technology / equipment and minimising the specific energy consumption through reduction of fuel & loss. The specific energy consumption expressed in terms of MBN (Thousand British Thermal Units / Barrel / Energy Factor) has come down from 100 to 64 within a span of 15 years. Efforts are on to achieve the industry benchmark level. 

Committed to safe operations, Gujarat Refinery has achieved accident free 89 million man-hours till July 2010. All process units - existing and under implementation - comply with all applicable safety standards and norms which includes installation of gas detectors, centralised fire call monitoring system, fire fighting facilities, process interlocks etc. Gujarat Refinery has two fire stations with fire fighting network spreading all over the refinery with monitors, hydrants and remote operated monitors. A three-Tier safety review level operates proactively to avoid any untoward incident. As a part of disaster management, mutual aid facilities among the adjoining industries are in place to supplement a well-defined disaster management policy of the Refinery. 

India's Reliance slashes gas reserve estimates

 India's Reliance Industries has slashed its recoverable natural gas reserve estimates in its main production fields by 70 percent, due to "unforeseen geological surprises", a minister said on Thursday.

Declining gas production at the D6 block in the Krishna Godavari basin, India's richest gas find, has already reduced the country's overall gas production, obliging it to import costlier liquefied natural gas.

Reliance, controlled by India's wealthiest man Mukesh Ambani, has cut estimated recoverable gas reserves from two gas fields in the KG-D6 basin off eastern India to 3.10 trillion cubic feet (tcf), junior oil minister R.P.N. Singh told the lower house of parliament.

The earlier estimate was 10.3 tcf, Singh said.

"The operator (Reliance) has attributed lower gas production (compared with an amended initial development plan) from the D1 and D3 fields to unforeseen geological surprises and reservoir," the minister said, without elaborating.

A Reliance company spokesman declined to comment, but said they had stated "a similar position" in their last annual report.

D1 and D3 are the largest of the 18 finds Reliance made in the deep-sea oil and gas blocks in the Bay of Bengal, which had started production in April 2009.

India's oil regulator and analysts have been concerned in recent months about falling oil and gas output from Reliance's main fields, which has seen its stock underperform.

Reliance currently produces 29 million standard cubic meters a day (mscmd) of natural gas from its fields, down by a half from its peak of 60 mscmd touched in 2010.

The energy giant had earlier said output has fallen due to "reservoir complexity and natural decline".

Last year, British energy giant BP paid $7.2 billion to acquire a 30 percent stake in 21 of Reliance's oil and gas fields.

Reliance hopes that BP's deep-water drilling expertise will give the Indian giant the skills to develop hard-to-exploit reserves and find more oil.

India 4th largest oil and gas consumer: Govt

New Delhi, July 31 (IBNS) India is fourth largest oil and gas consumer in the world after USA. China and Japan, said the Ministry of Petroleum & Natural Gas on Tuesday.

India is 4th largest oil and gas consumer in the world after USA. China and Japan. Share of crude Oil and Gas in primary energy consumption is about 40.3%, which is second to coal which is meeting 53% of the total requirements," said the ministry in a press note.

It said in recent years, natural gas has increasingly become the preferred option globally, as it offers clean and low price energy equivalence to expensive liquid fuel.

Demand of natural gas in India was 179 MMSCMD during the year 2010-11 and it is projected to be 473 MMSCMD in 2016-171.

As against this, the total production of natural gas from indigenous sources was 146 MMSCMD during the year 2010-11.

"Thus, there is an express need for availability of natural gas to be enhanced. This has necessitated the need to explore vigorously for unconventional or alternate hydrocarbon resources like Coal Bed Methane (CBM), Shale Gas / Oil, and Gas Hydrates etc," said the ministry.

Unconventional gas resources are also natural gas deposits but in a different and difficult environment from the exploitation point of view, it said.

Success of the recent specialized techniques such as horizontal drilling combined with fracturing of the rock has led to path breaking development of Shale Gas as an unconventional or alternate gas resource, it said.

"In line with the policy of the Government of India attracting private investment to move towards self reliance in the indigenous production of oil and gas sector, it is important to have a framework to facilitate and regulate Shale Oil and Gas Exploration and Exploitation," said the ministry.

The Government of India has invited suggestions from the general public, all stake holders, experts in Oil & Gas sector, environmental experts, NGOs, other persons and entities concerned, on the draft policy for exploration and exploitation of Shale Oil and Gas in India.

"The draft policy has been posted in the website of Ministry of Petroleum and Natural Gas (MoP&NG) and Directorate General of Hydrocarbons (DGH). The comments and suggestions may be sent to the following address not later than 31.08.2012," said the ministry.

News

IndianOil to set up refinery in Sri Lanka for Rs 20,000 cr 

30-JUL-2012 

Business Standard:

Mumbai: Indian Oil Corporation (IOC) will set up its first refinery outside India with an investment of up to Rs 20,000 crore in Sri Lanka. It will thus become the second Indian company to have a refinery abroad.

The Ruias-promoted Essar Energy owns the Stanlow refinery in the UK and has 50 per cent interest in Kenya Petroleum Refinery.

IOC operates 10 refineries in India and the capacity of its Sri Lankan refinery is expected to be 5-9 mtpa (million tonnes per annum). “We have done the analysis and have first-hand information on the kind of refinery we plan to set up in Sri Lanka. We are in discussions with the Sri Lankan government for tax concessions, a holiday for customs and excise, and other benefits that a refinery should accrue to us. The land will come from the Sri Lankan government,” said a senior IOC official who did not wish to be named.

IOC is already present in Sri Lanka through its subsidiary Lanka IOC. That company is the only private oil company that operates retail fuel stations in Sri Lanka. The state-owned Ceylon Petroleum Corporation also operates such stations. Lanka IOC has 157 fuel retail outlets. IOC’s refinery, the official added, could come up adjacent to an existing refinery in Sapugaskanda commissioned 43 years ago and processing 5,200 million tonnes per day of Iranian light crude oil.

IOC plans to set up the refinery in a joint venture with the Sri Lankan government, as the route would allow it easy clearances along with the government’s commitment.

“Keeping in mind its oil security, the Sri Lankan government has been looking at setting up another refinery. They were looking at expressions of interest from various countries. Since we were present in Sri Lanka, we held discussions with them. We have done the preliminary survey and have to see what kind of refinery would make economic sense,” said the official.

Sri Lanka’s only refinery has a refining capacity of two mtpa. The country’s fuel consumption is 4.5 mtpa, which necessitates 2.5 mtpa of imports. Sri Lanka’s fuel needs are estimated to rise to 6.5 mtpa by 2020 and 8.5 mtpa by 2030. Instead of importing fuel, the country plans to import crude oil and process it.

“Considering Sri Lanka’s fuel consumption targets for 2020 and 2030, we may look at either setting up a five-mtpa refinery or a nine-mtpa one. Accordingly, we’ll select the type of crude to be processed,” the official said. IOC accounts for 34.8 per cent of India’s refining capacity. Its refining capacity is 65.7 mtpa, the largest among refining companies in India.

Lanka IOC has a market share of about 43.5 per cent. It is a major supplier of lubricants and grease to Sri Lanka’s defence forces. “Lanka IOC is making phased investments to provide world-class quality petroleum products and services to the Sri Lankan customers,” the company says on its website.